Savings rates have certainly fallen over the past year, but you can still find a great deal for your money.
However, it's important to act quickly. With most analysts predicting the Base Rate will be cut repeatedly over 2024 and 2025, it's likely savings rates will keep falling for the foreseeable future.
Indeed we could see a rate cut as soon as tomorrow (21 March) after the latest CPI inflation data revealed a bigger-than-expected drop to 3.4% in February.
So, let's look at the best offers currently available, starting with regular savings accounts, which generally offer the best rates.
The catch is they're only really suitable for new savings, so if you're looking for a home for a larger pot then scroll straight to the next section.
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Regular savers: up to 7% (if you’re a member)
Regular savings accounts are generally best for new savers as they don't allow you to deposit a lump sum upfront: instead, you make regular monthly contributions, and the money is returned to you with interest after one year.
However, if the rates are generous enough, and you are eligible, then they can also work for savers with a pot already built up.
All you do is put your funds in the best-paying easy access account and filter some money into a regular saver (or savers) each month.
So, what rates can you get?
While the top rates have fallen slightly from 8% over the past year, there are plenty of accounts offering between 6% and 7%.
One of the most attractive is from The Co-operative Bank. It offers a 7% rate and you can deposit up to £250 each month.
Remarkably, that's more than double the current rate of inflation (3.4%).
While it’s available for both new and existing customers, you will need to have one of the bank’s current accounts before you apply.
Savers can also make an unlimited number of withdrawals without paying a penalty.
Alternatively, the Lloyds Bank Club Lloyds Monthly Saver enables you to save up to £400 each month and offers unlimited withdrawals.
However, it pays a lower interest rate of 6.25% and is only available to Club Lloyds current account holders.
Notice accounts: up to 5.45%
The top rate of 5.45% comes from Market Harborough Building Society. However, you need at least £10,000 to open it and the notice period is 195 days.
Alternatively, StreamBank pays 5.3% on its 90-day notice account. It can be opened with £1,000 and you can save up to £100,000.
Best fixed-rate savings: up to 5.28%
Before we get into the best fixed-rate savings, we wanted to point out an interesting shift we've seen in this part of the market.
In recent years, you were generally rewarded with a higher rate by agreeing to lock your money away for a longer period, with five-year fixes for the best-paying accounts.
But, with Base Rate expected to start falling at some point in 2024 as inflation comes under control, the best rates currently available are actually on shorter-term accounts, with one- and two-year fixes the pick of the bunch.
Now that we've got that out of the way, let's look at the top fixed-rate deals.
The best rate at the moment is from MBNA, which is a one-year bond that pays 5.27% with a minimum opening deposit of £1,000.
As an indication of how rapidly the savings market has changed, you could bag a rate in excess of 6% as recently as mid-November 2023.
This really highlights how important it is to get your skates on if you're planning to lock your money away in a fixed account.
Looking for a longer term than one year? Hampshire Trust Bank offers a three-year bond for 4.65% and a five-year bond for 4.54%.
Cash ISAs: earn up to 5.25%
The Personal Savings Allowance (PSA) has meant that it’s easy to get a tax-free return from your savings even if you don’t use an ISA, though it’s still worthwhile making use of your tax-free ISA allowance (which is £20,000 for 2023/24 and 2024/25).
That’s because any money you put into an ISA will stay tax-free long-term, even if the interest you earn grows beyond the PSA limits.
With the PSA, any interest you earn beyond the £1,000/£500 limit is taxed at your marginal rate.
The best rate on an easy-access Cash ISA right now is 5.15% from Plum, which lets you open from as little as £1 but does include a bonus rate of 0.86% in the first year.
Virgin Money is the best option for a one-year fixed rate ISA, paying 5.25%, but this is only available to existing Virgin current account customers.
The top fixed-rate ISA that's available to all is from Kent Reliance. It comes with a rate of 5.07% and has a £1,000 minimum deposit. It's fixed for one year.
Best easy/instant access savings: up to 5.20%
You can bag a rate of 5.20% with Ulster Bank, which doesn't have a minimum deposit amount.
Current accounts: earn up to 5%
You can get 5% fixed for a year on balances up to £1,500 with Nationwide’s FlexDirect account, but the interest rate falls to 1% after 12 months.
To qualify for the 5% rate, you'll also need to pay in at least £1,000 a month.
Where to earn the most interest on your cash
Here's a table with all the top deals for you to compare at a glance.
The account you go for will probably be determined by the amount you have to save and whether you want instant access to your money.
Please note that we've only included the highest-paying account from each category (i.e. five-year bond, instant access ISA).
|
Provider |
Type |
Interest rate |
Minimum/maximum deposit |
|
The Co-operative Bank |
Regular saver |
7% |
Max. £250 per month |
|
StreamBank |
90-day notice account |
5.3% |
Min. £1,000 |
|
MBNA |
One-year fixed-rate bond |
5.27% |
Min. £1,000 |
|
Virgin |
One-year fixed-rate ISA |
5.25% |
No min |
|
Ulster Bank |
Easy access |
5.20% |
No min |
|
Nationwide |
Current account |
5% on balances up to £1,500 |
Min. £1,000 a month |
Time to consider investing?
If you are comfortable taking on some risk for potentially better returns, you could consider investing in the stock market (capital at risk).